From Spuds to Digital Marketing in Russia
According to the World Bank Russia’s GDP was only expected to grow on average by 1.5-1.8% in 2018-2020. Russia was to lag behind other developing countries in terms of growth rates, even as global growth rates are expected to slow to around 2.6% a year. Meanwhile this week the Russian State Statistical Service’s (RosStat) has published revised data showing 2018 growth is up from the previous wimpy 1.6% to a healthier 2.3%, arguably the best result since 2012.
In one small corner of the Russian economy is a burgeoning advertising market that grew by about 12% in 2018 to approximately 400 billion roubles. By 2020, the slice of Internet in this advertising pie will increase from 40.6% to 44.4%. In 2019, it will become the largest media in Russia, surpassing budgets for television and other media.
In looking back along the timeline of marketing history in Russia, one of the pivotal moments had to do with marketing spuds back in the early 18th century. At that time Tsar Peter I (aka The Great) was in Holland, where he first tasted that gastronomic treat called the potato. He really liked it, after which he brought back a few bags of potatoes to Russia with the intention to home-grow them. It can be said that he was the first broadly effective Russian social influence marketer.
Potato tubers grew well on Russian soil, but the warm acceptance of these ‘foreign’ spuds by the peasantry was below zero. It is said ‘spud xenophobia’ was the reason, these immigrant tubers were aliens to mother Russia. When Tsar Peter learned of the total stubborn resistance to change, much like the refusal of Russian ‘muzhiks’ to shave their beards, he opted to use an innovative marketing strategy. He ordered several fields planted with potatoes, then stationed a large number of heavily armed guards with honed bayonets to stand watch over them, forbidding anyone to come near.
The soldiers guarded the potatoes all day, but slept off post at night. The peasants, who lived nearby, could not resist the temptation of forbidden fruit, as there must be more to these ugly things than meets the eye if they are so well guarded. They began to steal the potatoes at night and secretly plant them in their gardens.
Thus through creative contrarian marketing the potato spread very quickly throughout Russia. It quickly became a valued crop because it helped people to feed themselves when there were bad yields of traditional weather dependent grain crops. In Russia, the potato became known as the ‘second bread’ of the land. Nutritionally, the name of the spud says it all, and is derived from the German phrase ‘Kraft Toyfel’, which means the power of the devil. The Russian potato is therefore called ‘Kartofel’. I am sure Tsar Peter would be a happy camper if we equated each spud grown in Russia as an online ‘click’ – it would be a viral blog today.
The online advertising market and related e-commerce in recent years has shown strong growth. Online advertising already roughly matched offline advertisements in 2017. It was then that online advertising grew by 23% and reached about 116 billion roubles. This against the offline market – 117 billion roubles that also increased 13%, respectively. In 2018, 55% of the total number of Russian Internet users, or 39 million people, spent about 591 billion roubles on goods and services online.
Just a couple of years ago, many doubted that the volume of the Internet advertising market could exceed the volume of the TV advertising market. Today it already has. There are about 15–17 thousand monetized bloggers in Russia today. Social Influence marketing is still the youngest advertising medium in the world today, yet it is exploding. The Russian market is still at an early stage. In terms of penetration, it lags behind cutting edge global markets by about three years. Nevertheless, the trends, the stages of maturation and the speed of development are comparable to what is happening in other global markets.
Taking into account the existing dynamics, by 2021 the market volume of influence marketing in Russia will grow to 30 billion roubles, and the number of high-quality bloggers has been variously estimated to reach at least 80 thousand.
Internet advertising itself is also evolving. Remember the beginnings, it all started with banners on various websites, then with the advent of search engines, then contextual advertising appeared. Just a bit later targeted advertising and social networks began, and the influence-marketing segment took off and is vibrantly growing. In the next five to six years, the technologies of machine learning, neural networks and artificial intelligence will play their parts in this data driven market.
Taking a worldview, the Internet is now an integral part of life. According to the latest data presented on Wikipedia, 3 467 560 991 people use the Internet, which is 48% of the total population of the Earth. Accordingly, almost half of the planet is actively following the constantly emerging new technologies, gadgets and their tools.
If you look at statistics, Russia ranks sixth in the world in the number of Internet users. In numbers, it is 105,311,724 people, which is 73.41% of the country’s population. This indicator is quite high, therefore we can obnose (to observe the obvious), that Russians are active Internet users.
Digital marketing has many advantages. It gives the advertiser the most effective return on marketing spend, the ability to analyse the audience and its statistics, offers many constantly changing formats for creating unique promotions, and tweaking them as needed in real time. The challenge inside Russia is similar to that of the rest of the world, qualified specialists. To meet this need, a number of educational centres throughout the entire Russian Federation and the Eurasian Economic Union have been funded, expanded and established over the past 5 years to meet this need for specialists, such as web analysts, digital strategists, programmers and internet marketers.
The other day I walked into a McDonalds here in Moscow as my son asked me to pick him up a Big Mac and fries on my way home. Looking around me I saw that just about everyone seated there was somehow online, on smartphones, planchettes or notebooks, eagerly drinking in their preferred social media along with their Latte’s. This market has come a long way from forbidden fruit marketing of the first spuds, and with WiFi first introduced in 2008, seems safe to say that the adventure is just beginning.